Ssangyong, South Korea's smallest carmaker, is to sell a majority stake to the Indian utility vehicle maker nearly two years after it filed for bankruptcy. The deal will bring Mahindra's stake in Ssangyong to 70 percent, the Yonhap news agency reported.

The ailing company's parent, China's Shanghai Automotive Industry Group had pulled out in the face of mounting losses and the global downturn slashing car sales.

"With the agreement, Ssangyong Motor will have a chance to become a global SUV manufacturer through increased global sales and R&D as well as development of new products as it now has new management with vast resources and a large market," Ssangyong's court-appointed manager Lee Yoo Il was quoted as saying.